Government Lemons

Barack is pressing a bailout for automakers.

President-elect Barack Obama would like the government to find additional authority to deal with the liquidity crisis in the American automobile industry, Obama's transition co-chairman said on Tuesday.

The Obama team earlier leaked details of the disagreement over an auto bailout that arose between President Bush and Barack in their private meeting yesterday.

John Podesta said Obama stressed the need to help the ailing U.S. auto industry during talks with President George W. Bush at the White House on Monday.

"He's hopeful the government will look for additional authority to deal with the short-term liquidity crisis ... and get onto a program and a plan that would ensure that the auto industry can ... continue as ... independent companies ...," Podesta said in a briefing.

More on what Barack wants:

There are two primary ways President Bush could provide aid, either through the recently passed $25 billion in federal loans to help automakers retool (though automakers might needs those funds simply to make payroll) OR through the $700 billion in TARP (Troubled Assets Relief Program) funds, less than $500 billion of which has been allocated.

The Big Three automakers have asked for an additional $25 billion to help prevent their going into bankruptcy. On Saturday, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid asked Treasury Secretary Henry Paulson to consider using the TARP funds to help the automakers, though the White House seemed to reject that idea on Monday;

The Kwame Effect

The Mayor of Detroit is going off to prison for a host of transgressions surrounding his desire to keep his affair with an underling quiet. Could this hurt Barack?

Long before sex, lies and texting caused Detroit Mayor Kwame Kilpatrick to plead guilty to two felonies and resign on Thursday, he and Barack Obama shared a warm man-hug before a huge Motown crowd.

I met Kilpatrick once a few years ago, and there's nothing about him that reads like Barack. A flashy-dressing black man who is big enough that you think he might have been a professional athlete, he is loud and urban in contrast to Barack's soft sophistication. Barack embraced Kwame while he was giving a speech in Detroit.

But while that speech gave Obama green street-cred, his praise of Kilpatrick as a "great mayor" who will do "astounding things for many years to come" backfired.

That hug is now a TV commercial, and it could impact the race in swing-state Michigan, where Barack presumably loses the effective utilization of Kilpatrick's political machinery.

But beyond the mechanical breakdown, Kilpatrick's salacious, headline-commandeering controversy has inflamed the racial tensions that have riven this region.

Detroit is 80 percent black.

Among the Kilpatrick die-hards in Detroit—still a significant minority—Obama could be viewed as a traitor. "People are upset he waited until the last minute and then piled on," says political consultant and Kilpatrick supporter Adolph Mongo.

John Kerry won Michigan by 3 poins in 2004. Will Barack's chances of repeating for the Democrats be damaged by the scandal?

To comfortably keep Michigan Blue, as it has been since 1992, Mongo contends Obama needs a near-record turnout in the city of Detroit, on the order of 60 percent of the registered voters. By comparison, when John Kerry took Michigan by 3 points in 2004, just more than 40 percent of Detroit's registered voters showed up at the polls. Without Kilpatrick around to oil Detroit's political machine, getting out the vote will be difficult, says Mongo.

As of mid-August, the Real Clear Politics average of polls showed Barack leading in Michigan by 4.3 points. But this ad:

produced by the conservative Freedom's Defense Fund and soon going into heavy rotation on Detroit TV stations, shows Kilpatrick's mug shot, as the 10 felonies he faced scroll down the screen while Obama says, "I'm grateful to call him a friend." The ad ends ominously with the line: "You should know who Obama's friends are."